3M Co. on Friday joined the growing list of companies taking one-time charges against earnings because they have lost a key tax deduction as result of the newly enacted health care law.
The Maplewood-based company said it would take a one-time, non-cash charge of $85 million to $90 million after tax, or about 12 cents a share, in the first quarter. The charge reflects the loss of a tax deduction on subsidies the company receives from the government to provide prescription drug coverage for its retirees.
In January, 3M increased its earnings expectations for 2010 from its prior forecast of $4.85 to $5 a share to $4.90 to $5.10. On Friday, 3M did not say how much annual subsidy it expects to receive for its retiree drug coverage.
Several other companies, including Deere & Co., Caterpillar Inc. and AK Steel Corp., have announced similar one-time charges. AT&T said Friday it would take a $1 billion noncash charge against earnings because of the tax deduction change.
The loss of the tax deduction isn't the only impact 3M is expecting from the health care overhaul. The company also said this week it may face higher costs because of a medical-device tax contained in the legislation. A variety of 3M products -- including dental and orthodontic appliances, skin- and wound-care products and surgical drapes -- could be subject to the tax.
3M spokeswoman Jacqueline Berry said the annual tax could total $25 million to $50 million. She said it could prompt the company to stop making certain devices or pass the tax on to patients or providers in the form of higher prices.
Susan Feyder • 612-673-1723
